Redundant Employees were Unfairly Dismissed

In the EAT case of Contract Bottling Ltd v Cave (1) and McNaughton (2) it was held that the reason for the Appellants’ dismissals was, indeed, redundancy even though the jobs they had both performed continued to exist after their dismissals. How so?

The key statutory provision is section 139(1) of the ERA 1996, which defines redundancy in the following way:

“For the purposes of this Act an employee who is dismissed should be taken to be dismissed by reason of redundancy if the dismissal is wholly or mainly attributable to—

(a) the fact that his employer has ceased or intends to cease—

(i) to carry on the business for the purposes of which the employee was employed by him, or

(ii) to carry on that business in the place where the employee was employed, or

(b) the fact that the requirements of that business—

(i) for employees to carry out work of a particular kind, or

(ii) for employees to carry out work of a particular kind in the place where the employee was employed by the employer,

Have ceased or diminished or are expected to cease or diminish.”

In this case the employer’s case was that it had a reduced requirement for employees to carry out work of a particular kind. However, strangely, although the cuts were only needed amongst administration and accounts staff, it decided to put ALL its staff in the pool and apply a generic selection matrix in order to determine who would be dismissed. What this meant was that people were retained in administration and accounts and others from other departments where such a reduction in headcount was not required, were dismissed. The Employment Tribunal mistakenly held that, because the individuals who were dismissed were not from the departments where the reduction in headcount was needed, their dismissals could not have been by reason of redundancy. However, the EAT overturned this decision on the basis that it was perfectly clear that there was a reduced requirement in the company for employees to carry out work of a particular kind. It was irrelevant, for the purpose of the definition, whether the pool from which the staff were selected went beyond the areas where reduction in headcount was needed. What the pool for selection does is help determine whether or not the decision to dismiss for redundancy was fair.

As a result, the EAT upheld the company’s appeal against the Tribunal’s finding that the reason for the dismissals was not redundancy. However, it agreed with Tribunal’s finding that the dismissals were, nevertheless, unfair. It then remitted the case back to the original Tribunal for it to assess whether the compensation awarded to Cave and McNaughton should be subject to a Polkey reduction on the basis that they would likely have been dismissed anyway even if a fair procedure had been followed.

Interestingly, the original tribunal’s finding of unfair dismissal was not centred around the somewhat unusual (to put it mildly) pool for selection, but was instead highly critical of the process for selection from that pool. This case is therefore also useful as an illustration of how difficult it is for an employment tribunal to criticise the pool from which employees are selected for redundancy provided the employer can (a) show it has given real consideration to the pool and (b) provide evidence to establish that it was not outside the range of reasonable responses to select from such a pool.

The Dismissal Vanishes!

Beware the employer who reinstates an employee following a successful appeal against dismissal but then seeks to impose conditions to the reinstatement, particularly if the original decision to dismiss was based upon a flawed disciplinary or capability procedure.

In the recent EAT case of Thomson v Barnet Primary Care Trust UKEAT/0247/12, a district nurse was summarily dismissed on capability grounds.  She lodged an appeal and was successful.  So far so good and the PCT probably felt it was out of the woods.  However, although she was reinstated with full back pay for the period between the initial dismissal and the outcome of the successful appeal, her employer, a primary care trust said she could only actually return to work if she accepted (a) a final written warning to remain on her file for three years; (b) attendance on a training programme and (c) a competency assessment.  She was suspended on full pay whilst she decided whether to accept these conditions.  After a period of time during which the PCT and the nurse were wrangling over these conditions, she resigned claiming constructive dismissal, stating that the reasons for her resignation were the fact that the PCT had committed significant contract breaches prior to her original dismissal and had compounded those breaches by seeking to impose new contractual terms upon her following her reinstatement.

The employment tribunal held that the Claimant, in accepting her pay whilst effectively suspended, had accepted the new conditions.   It also held that she was not able to rely upon any alleged breaches which occurred prior to her dismissal as she had effectively waived them by accepting her pay.

The EAT disagreed and upheld the Claimant’s appeal.   Although she never returned to her post, her employment had been reinstated, the effect of which was that there had been no dismissal.  The dismissal effectively vanished.  However, the primary care trust’s handling of the disciplinary process, combined with the subsequent imposition of the conditions, amounted to a repudiatory breach of her contract. The EAT held that the tribunal had erred in its conclusion that the employee had waived the right to complain about breaches which occurred prior to the original dismissal because the success of her appeal meant that she hadn’t actually ever been dismissed.  The dismissal was as if it had never taken place and as such the Claimant could not be found to have accepted the new contract terms or waived the previous breaches.

So what should an employer do when it decides to overturn a decision to dismiss on appeal?  In my opinion, the first thing the employer must decide is whether the success of the employee’s appeal was because of the employer’s own failure to follow its original procedure properly or whether it was because the employee brought new evidence to the appeal which meant the dismissal was no longer appropriate.  If the former (as in this case) then it would seem to me to be wholly inappropriate to try and impose a different sanction (even if the relevant procedure allowed for this) as the imposition of any sanction would be based upon a flawed procedure.

My advice in this case would be for the employer carry out the procedure again but this time correctly.  If, at the end of the process, it determined to dismiss or instead that some lesser sanction could be imposed in accordance with its own procedure, then it could be fairly confident in the safety of its decision.  However, if the employer determined when considering the employee’s appeal that the decision to invoke the procedure which led to the original decision to dismiss had not been the right decision, then the only option is to reinstate the employee without invoking any conditions.  It would also be very wise to apologise to the employee in either case!

Reduction in Headcount not Needed for a Redundancy

“An employee who is dismissed shall be taken to be dismissed by reason of redundancy if the dismissal is wholly or mainly attributable to – […]

(b) the fact that the requirements of that business –

(i) for employees to carry out work of a particular kind […]

have ceased or diminished or are expected to cease or diminish.

It was held in the recent EAT case of Packman t/a Packman Lucas Associates v Fauchon that for a redundancy situation to arise there does not necessarily need to be a reduction in headcount.  The focus must be on the employer’s requirements for employees generally to carry out work of a particular kind as opposed to the requirement for a particular employee to carry out work of a particular kind.  What this means is that the focus must be on the requirements of the business, not the particular contractual obligations of the employee although clearly these will be linked.

The particular facts of this case are as follows:

Ms Fauchon was a book-keeper for Packman.  However, there was a downturn in the business and, at the same time, Packman introduced an accountancy software package.  As a result Packman had a erduced need for book-keeping and therefore asked Ms Fauchon to reduce her hours.  She refused to work reduced hours and was therefore dismissed.  She brought tribunal proceedings against Packman and it was held that she had been dismissed by reason of redundancy and as such was entitled to a statutory redundancy payment.  Packman appealed but the appeal was dismissed.

The EAT held that whilst there may be redundancy situations in which an employer needs fewer employees to do the same amount of work, redundancy situations also arise where the amount of work available for the same number of employees is reduced (as in this case).  However, if there is just as much work for just as many employees, then a dismissal arising out of the situation would not be a redundancy.  It is not sufficient for an employer to simply say that it wants the same amount of work to be done by the same number of employees but over shorter hours.

A Refusal must be Explicit

One would have thought that an employer dismissing employees for being asleep on the job would be a fairly safe thing to do. As it turns out, the employer in the case of Ajayi and another v Aitch Care Homes (London) Ltd UKEAT/0464/11 got away with it, but had to fight the employees’ claims all the way to the EAT.

As the employees concerned had less than a year’s service, their lawyer had to come up with a plan to enable them to bring their claims as, ordinarily, with employees with less than the requisite level of service, an employer can dismiss with impunity. The exception to this is if the dismissal is for one of a number of automatically unfair reasons.

In this case, the employees argued that they had been dismissed because they refused to forgo a right conferred on them by the Working Time Regulations 1998 (“WTR”). They argued that the employer had not allowed them the right to a statutory rest break as conferred under the WTR and that as such, their taking a nap whilst at work was indication of their refusal to forgo that right.

The EAT disagreed and upheld the tribunal’s decision. It expressed the view that a “refusal” must be more than simply “non-compliance”. It must be explicit and not something which the employer might be able to infer from the employee’s conduct.
The EAT gave the following reasons for its decision:

1.  Parliament specifically used the terms “refused” or “proposed to refuse”.  Had it intended non-compliance to be sufficient, it would have used words such as “failed” or “did not comply”.

2.  Without the requirement for an explicit refusal, it would not always be clear to an employer that the employee is refusing to comply.  For example, in this case, the employer might never have actually discovered the employees asleep.

3.  Regulation 12 of the WTR 1998 provides for minimum rather than precise rights. It does not, for example, provide that a worker is entitled to a break after working six hours. A worker with an eight-hour day will be entitled to a rest break, but whether that break comes after three, four or six hours is a matter for discussion between employer and employee. The regulation sets out a structure within which rest break rights will be negotiated and agreed in the workplace. There is a need for communication, and the word “refusal” in section 101A reflects this.

Had the employees had sufficient service to bring ordinary unfair dismissal claims, the tribunal may well have found in their favour on the basis that the employer was in flagrant breach of the provisions of the WTR in refusing them rest breaks.

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